No. 93-078

IN THE SUPREME COURT OF THE STATE OF MONTANA

1993

MARY M. TONDU,

Plaintiff and Appellant,

-vWALTER S. "PETE" AKERLEY,

Defendant and Respondent.

APPEAL FROM: District Court of the Fifth Judicial District,

In and for the County of Beaverhead,

The Honorable Frank M. Davis, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Max A. Hansen, Max A. Hansen & Associates, Dillon,

Montana

For Respondent:

Robert Edd Lee, Crowley, Haughey, Hanson, Toole &

Dietrich, Billings, Montana

Submitted on Briefs: May 13

JtiN23 1993 Decided: June .25,1?g393

Filed:
Justice James C. Nelson delivered the Opinion of the Court.

This is an appeal from a Fifth Judicial District Court,

Beaverhead County, judgment in a bench trial. We affirm.

There are two issues on appeal:

1 . Did the District Court err in concluding that a

partnership did not exist between Mary Tondu and Walter

Akerley?

2 . Did the District Court equitably distribute the funds

at issue?

Mary M. Tondu (Mary) and Walter S. "Pete" Akerley (Pete) met

in late 1988. They had similar interests in raising cattle and

soon verbally agreed to enter into business together to raise

purebred registered cattle. Each of the parties contributed

assets, monetary and otherwise, to begin the enterprise. Both

parties contributed their knowledge, skills, and experience toward

the management and operation of the business. They were to have

equal one-half interests in the business.

Mary and Pete also entered into a domestic relationship,

living together and conducting their business in a rental property

in Sheridan. During this time, each party also devoted time to

separate pursuits and other employment.

Wages from these other income sources were added to monies

from the business. Mary and Pete also took out joint loans to

finance their operation. Mary and Pete had a joint checking

account, a joint savings account, and two separate checking

accounts, owned individually. In fact, monies from all income

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sources were commingled within the 4 accounts and used to pay

business and personal expenses.

Although they shared their incomes and their business

interests, they filed separate income tax returns during their

venture together, instead of a partnership tax return. Mary

indicated that the couple's accountant advised her that filing

separately was the appropriate method for filing their returns.

In the spring of 1991, the personal relationship was

terminated and in April, Mary moved to Arizona. The parties tried

to terminate their business relationship as well, but they

encountered problems, and Mary filed this action on January 27,

1992.

The trial court concluded that no partnership was established.

Mary was entitled to the sum of $2,750, together with her share of

the allocated interest. Brian Barragree, who performed some work

for the couple, was owed $1,000, and the remainder of the money

from the sale of the business assets sold at the termination of the

relationship and deposited with the Clerk of Court, was awarded to

Pete. The total account was approximately $14,000. Mary appeals.

Our standard of review of a district court's findings of fact

is clear. Rule 52(a), M.R.Civ.P., provides in pertinent part:

Findings of fact shall not be set aside unless

clearly erroneous, and due regard shall be given to the

opportunity of the trial court to judge of the

credibility of the witnesses...

In interpreting this rule, we have adopted the following

three-part test:

First, the Court will review the record to see if

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the findings are supported by substantial evidence.

Second, if the findings are supported by substantial

evidence we will determine if the trial court has

misapprehended the effect of evidence. Third, if

substantial evidence exists and the effect of the

evidence has not been misapprehended, the Court may still

find that "[A] finding is 'clearly erroneous' when,

although there is evidence to support it, a review of the

record leaves the court with the definite and firm

conviction that a mistake has been committed."

Interstate Production Credit v. DeSaye (1991), 250 Mont. 320, 323,

820 P.2d 1285, 1287. (Citations omitted.)

ISSUE I. FORMATION OF PARTNERSHIP

In her complaint, Mary asserts that she and Pete formed a

partnership and at its dissolution, Pete must make an accounting

and pay her for her share of the partnership assets. Pete contends

that they had a cooperative business relationship and he has fully

compensated Mary for her share of the assets.

Section 35-10-201(l), MCA, defines a partnership as "an

association of two or more persons to carry on as co-owners a

business for profit." Barrett v. Larsen (1993), 50 St. Rep. 96,

846 P.2d 1012, provides the following elements as indicative of a

partnership:

To establish . . . a partnership, it is necessary to

determine the intent of the parties: such business

relationships arise only when the parties intend to

associate themselves as such. There must be some

contribution by each co-adventurer or partner or

something promotive of the enterprise. There must be

joint proprietary interest and a right of mutual control

over the subject matter of the enterprise or over the

property engaged therein, and there must be an agreement

to share the profits. The intention of the parties has

to be clearly manifested, and must be ascertained from

all the facts and circumstances and actions and conduct

of the parties. (Citations omitted.)

Barrett, 846 P.Zd at 1015.

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A. Clear Manifestation of Intent to Establish a Partnership

In Antonick v. Jones (1989), 236 Mont. 279, 769 P.2d 1240, we

pointed out that "[t]he initial test of whether a partnership

exists is the intent of the parties. This inherently implies a

mutual agreement or meeting of the minds." Antonick, 769 P.2d at

1242-1243. (Citation omitted.)

The element of intent to associate as partners in this

instance is highly debatable. Pete testified that "1 wouldn't have

considered a partnership." He also asserted, when asked why by the

court, "Your Honor, I think a partnership has to be equal donations

and equal service. I've been in comparably the same situations

previous, and I've never seen them work. And I wasn't about to get

into another one." Section 35-lo-401(7), MCA, states that "[n]o

person can become a member of a partnership without the consent of

all the partners." In this case, there is direct testimony that

one of the alleged partners did not wish to be associated in a

partnership.

Moreover, there is other evidence to support Pete's argument

that he did not want to form a partnership with Mary. Although the

two parties used the Diamond Dot brand, owned by Pete, it was never

transferred to the partnership. Mary was a signer on the brand,

not a co-owner.

Although Mary stated that they conducted business under the

name of "Akerley and Tondu" or Akerley and Tondu d/b/a "Diamond Dot

Ranch" or "Diamond Dot Angus", they never registered the name of

their partnership with the Secretary of State. They also never put

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into writing their desire to associate in a partnership.

Further, they filed separate tax returns instead of

partnership returns. The intention of the parties to form a

partnership is not clearly manifested as required.

B. Contribution and/or Promotion of the Enterprise

Each party made a contribution to start the business. The

trial court stated that Mary contributed about $12,000 and some of

her shorthorn cattle to the enterprise and Pete contributed about

$3,000 in cash and "his knowledge and experience in the unique

business of transplants and artificial insemination." The parties

obtained joint loans and jointly purchased cattle and necessary

equipment to facilitate their operation. Both parties were

involved in the operation and management of the business. From the

testimony elicited, it is clear that both parties put considerable

effort into promoting this enterprise.

C. Right of Mutual Control

In the pre-trial order, the agreed statement of facts states

that "[b]oth of the parties actively participated in purchasing and

marketing their livestock." For instance, during the Labor Day

weekend of 1991, Pete and Mary met with Walter Perkins and Floyd

Fredrickson about the sale of some of their cattle. Pete had

earlier arranged the meeting with Walter Perkins. Mary arranged to

have some of the cattle cared for and taken to the winter fair for

show by some Sheridan high school students for possible sale at a

later date.

When Mary's attorney asked Floyd whether he was dealing with

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both Mary and Pete concerning the sale of cattle, Mr. Perkins

stated, "Yes. " From the testimony presented, Mary and Pete

maintained mutual control over the animals.

D. Agreement to Share Profits

The trial court's findings of fact concerning sharing of

profits stated:

The parties had no agreement expressed or implied as

to the sharing of the financial benefits of their

business relationship. Indeed there was little, if any

profit as the term is commonly used in a joint business

venture. It is apparent from the record that the

enterprize (sic) was aesthetically mutually satisfying,

and supplemented their individual incomes, providing them

a good living during the short-lived association. Even

Mary's daughter was advanced money and otherwise

benefitted from the relationship. Repeatedlytheparties

withdrew money from the business accounts for their

respective personal use. In November, 1989, Mary

actually repaid a $4,500 loan which had been negotiated

by Pete, from her own personal account. Pete contributed

$1,700 from his personal account to purchase a tractor

and horse. Once Mary withdrew $775 from joint funds to

supplement the purchase by her of an automobile. Neither

party ever objected to this co-mingling [sic] and joint

personal use of these assets.

Mary and Pete both stated that they had no agreement as to

sharing profits. When asked about any agreement to share profits,

Pete testified, "No. Just pool our money. It was just an oral

agreement. We would pool and just go on." Further testimony

revealed that money from cattle sales would be deposited into any

account at any time and may have been used by Mary or Pete or

jointly by the two. This is a second element of a partnership that

the Tondu-Akerley business relationship cannot meet; there was no

agreement between the parties to share profits.

The burden of establishing a partnership is on the party
claiming one. Antonick, 769 P.2d at 1242. We conclude that Mary

has failed in her burden of proof, and we hold that the cooperative

business association entered into by Mary Tondu and Walter "Pete"

Akerley does not contain the elements necessary to establish a

partnership.

This Court notes that a side issue existed which reflected

upon Mary's credibility and her contention that she and Pete had

established a partnership. There were a number of checks written

on Pete's individual checking account which purportedly contain

Pete's signature but do not appear to be in Pete's handwriting.

Mary repeatedly denied signing these checks but the trial court

concluded that:

Mary wrote checks on Pete's account, signing his

name. While Mary now denies that she did this, the

evidence was persuasive that she did. Pete now denies

that he authorized these checks, the evidence however

convinces the Court that he at least knew or should have

known about it. In any case the so called unauthorized

checks amounted to less than $2,000.

"The trier of fact is in the best position to hear the testimony

and observe the witnesses and their demeanor....Particularly where

credibility of witnesses is involved, we give great weight to factfindings of a district court." Scott v. Eagle Watch Investments,

Inc. (1991), 251 Mont. 191, 195, 828 P.2d 1346, 1349. The trial

court was in the best position to determine whether Mary was

credible, and we give its decision due regard.

ISSUE II. EQUITABLE DISTRIBUTION OF ACCOUNT

As a final issue, Mary seeks a determination as to whether an

equitable distribution of the funds was effected. "[A] court of

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equity will, when its jurisdiction has been invoked for an

equitable purpose, proceed to determine any other equities existing

between the parties connected with the main subject of the suit,

and grant all relief necessary to an entire adjustment of such

subject." Tiffany v. Uhde (1950), 123 Mont. 507, 512-513, 216 P.2d

375, 378.

Pete's attorney, in moving the court for a judgment upon the

evidence at the close of the hearing, stated:

. ..that Mary Tondu is entitled to the proceeds from

cow NO. 161 sold to Fredrickson . . ..that Mary Tondu is

entitled to registration and entry fees which Pete

Akerley agreed to pay her during the Labor Day weekend of

1991 in the approximate amount not exceeding $2,000,

except for Cow No. 161, which was her cow and upon which

she ought to pay her own fees....

However, in his post-trial supplemental findings and

conclusions, Pete states that Mary should be awarded $849.75 for

registration and other expenses incurred on the sale of Akerley

cattle after the settlement in June 1991. He also argues that

there was no transfer of Cow 161 and therefore, no money owed for

the animal.

Mary states, in her final proposed findings of fact and

conclusions of law and her additional brief in support of the final

proposal, that she is entitled to have the partnership capital

accounts equalized. According to Mary, she should receive the

balance of the approximately $14,000 on deposit with the Clerk of

Court after Brian Barragree is paid the $1,000 owed him for his

work. She also claims an additional payment of $10,900 is

necessary to "reimburse her for her excess capital contributions."

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The trial court, in its findings of fact, stated that, among

the unfinished business between the two parties, were Mary's

expenditures during the 1991 Labor Day weekend. It concluded that

registration and entry fees and other costs of approximately $2,000

were incurred by Mary.

The judgment, filed on September 10, 1992, awarded Mary the

sum of $2,750 and her allocated share of the interest. Pete

Akerley was awarded the remainder of the trust after Brian

Barragree, a fitter the couple hired to prepare some of their

cattle for sale, was paid $1,000 for work performed. We conclude

that the trial court effected an equitable settlement.

In conclusion, the findings of fact are supported

substantial evidence, the trial court did not misapprehend the

effect of the evidence and the findings are not clearly erroneous.

AFFIRMED.

We Concur:
June 23, 1993

CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the following

named:

Max A. Hansen, Esq.

Max A. Hansen & Associates, P.C.

P.O. Box 1301

Dillon, MT 59725

Robert Edd Lee, Esq.

Crowley, Haughey, Hanson, Toole & Dietrich

P.O. Box 2529

Billings, MT 59103

ED SMITH

CLERK OF THE SUPREME COURT